This blog was written by NHeLP’s Senior Attorney Katy DeBriere, and Justice in Aging’s Senior Attorney Rachel Gershon, JD MPH
Despite rhetoric to the contrary, many older adults and people with disabilities will lose access to life-saving care if the proposed reconciliation bill is enacted. Excellent analysis has been done about how implementing the bill’s proposed Medicaid work requirements will harm people with disabilities and older adults by cutting off those whose health conditions prevent them from engaging in part-time work or merely by the inevitable fallout that occurs when additional administrative burdens are forced on states and Medicaid beneficiaries.
The reconciliation bill would also have a direct and intentional impact on Medicaid eligibility for those enrolled in Medicare – that is, older adults and those who have a disability. Specifically, the proposed legislation halts implementation of two newly adopted rules to improve administration of Medicare Savings Programs (MSPs). The Congressional Budget Office (CBO) estimates that the consequences of stopping this rule will mean 1.3 million Medicare enrollees would lose Medicaid coverage of Medicare costs. The CBO noted that this loss in financial support will mean that Medicare enrollees will not be able to access Medicare services – to the tune of $11 billion dollars. Cuts to Medicaid will be used to help pay for tax cuts for corporations and wealthy individuals.
What are MSPs?
Medicare is costly. MSPs are Medicaid programs that pay Medicare premiums and can cover deductibles, coinsurance, and copayments. Anyone who is enrolled in an MSP should also get help with Medicare prescription drug costs through the Low-Income Subsidy (LIS) program. MSPs are key to making Medicare affordable.
Who Is Eligible for an MSP?
MSPs are designed to assist low-income Medicare enrollees – typically with incomes under $1,781 for an individual although some states have higher income limits. Because the pathways to Medicare eligibility require a person to be over 65 or qualify for Social Security Disability Income (SSDI), MSPs offer targeted financial support to low-income older adults, people with disabilities, and their families.
What Are the New MSP Rules?
Despite the fact that MSPs offer critical financial assistance to low-income Medicare enrollees, complex enrollment rules had historically led to low enrollment, with only about half of those eligible actually enrolled. The new MSP rules were finalized in 2023 and 2024 and accomplish the goal of increasing MSP participation in several different ways.
The MSP streamlining rules automate enrollment for eligible individuals on other means-tested programs, saving on paperwork and wasted time for both Medicare enrollees and state agency staff. Just a few months into implementation, hundreds of thousands of eligible Medicare enrollees were newly enrolled in MSPs and gained additional financial support. The rules adopt strategies that were successful in other parts of the Medicaid program to ensure that eligible individuals stay enrolled in an MSP by simplifying eligibility requirements and requiring states to promptly process applications and renewals. These strategies reduce unnecessary costs, beneficiary stress, and poor health outcomes related to churn. The rules also require states to eliminate redundant requests for information to determine eligibility, to provide clear notice about the evaluation process, and to inform individuals about MSP application assistance. Additionally, the rules align eligibility requirements with the Low Income Subsidy program, ensuring that, in determining MSP eligibility, states account for the financial pressures older adults and people with disabilities face when caring for dependents by requiring states to count those dependents in the household when setting individual income limits.
How Do the New Rules Benefit Older Adults & People with Disabilities?
As noted in the new rules, MSPs “are essential to the health and economic well-being of low-income Medicare enrollees, helping to free up limited income for food, housing, and other life necessities.”
The rule also supports second generation caregivers who generously volunteer to look after their grandchildren and adults who care for their aging parents at home. Stalling the implementation of these new rules would significantly increase financial stress on these caregivers who – even with the support MSPs provide – can barely afford life’s necessities for them and their loved ones.
Furthermore, for people with significant disabilities and complex medical diagnoses who regularly see specialists and take expensive prescription medications, MSP enrollment can be their only safeguard against the medical debt they would otherwise incur. MSPs also increase access to financial support for prescription drug coverage, which is shown to improve medication adherence, improve access to cancer treatment, and decrease mortality.
How Does the Reconciliation Bill Impact the New Rules?
Many parts of the streamlining rules are already in effect, with full implementation set for June 2027. The proposed budget bill would place a moratorium on the rules’ implementation until 2035. If the reconciliation bill is enacted, much of the significant benefits these rules will and currently do have on the lives of Medicare-enrolled older adults and persons with disabilities – saving them money, improving their access to health care, and protecting them from exorbitant medical debt – will be lost.
